Remondis acquisition of packaging body DSD blocked by German monopolies agency

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Germany’s Federal Cartel Office Bundeskartellamt has blocked a proposed acquisition by waste management giant Remondis of the packaging recycling scheme Duales System Holding (DSD).

Bundeskartmellamt prohibited the purchase on the basis that it would have led to higher costs for customers of both companies.

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Remondis is the largest waste management company in Germany, and collects, sorts and reprocesses packaging materials for recycling.

DSD is the largest dual system for packaging recycling in Germany. The dual systems organise the recycling of packaging waste on behalf of manufacturers, importers and retailers, who are responsible for recycling the packaging. These pay a fee to a dual system, who then commission companies to collect the material.

This could have meant that DSD would commission its owner Remondis to collect recyclable material.

Bundeskartellamt president Andreas Mundt said: The proposed merger would have significantly impeded competition between the dual systems for packaging recycling. It would have led to higher costs for DSD’s competitors, significant market share gains for DSD and finally higher prices for the disposal of sales packaging.

“A further problematic aspect is the fact that the two companies achieve joint market shares of 40 to 60 per cent in the marketing of recycled glass. The commitments offered by the companies were not suitable to eliminate the competition concerns.

“The concentration would change the entrepreneurial conduct of the merged company Remondis/DSD. Contracts to provide input services such as the collection of sales packaging are put out to tender by dual systems like DSD. Waste management companies tender for these contracts. As a waste management company, Remondis would have a post-merger incentive to charge DSD’s competitors higher prices for the collection, sorting and reprocessing services than before the merger in order to place them at a disadvantage to its own company, DSD.

“This strategy of raising the costs of DSD’s rivals could enable Remondis/DSD to gain significant additional market shares, squeeze out competitors and, ultimately, enforce higher prices on the market for dual systems for packaging recycling. This would translate into higher prices for packaging which consumers would end up paying.”

Both companies now have a month to appeal against the decision to the Dusseldorf Regional Higher Court.

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